Choosing an alternative financing option for your business can be hard. You need to weigh the options and choose the right one. With the different business needs, it is crucial to settle for the best funding source. Factoring and asset-based lending are the options you can consider. But which one is the best? This guide provides more information.
Asset-based lending is where you get a loan or line of credit by using your business’s assets as collateral. The collateral, in this case, serves as security for the funds the lender provides. To secure an asset-based loan, you can use equipment, accounts receivables, inventory, and other valuable assets.
Why Asset-Based Lending?
You can borrow up to millions when you consider asset-based lending to fund your projects as a business. This is unlike other financing options that have limits. The higher amounts allow you to handle any business operations without straining.
As long as you have valuable assets, accessing and using an asset-based loan is easy. The availability of conventional lenders, including banks and credit unions, makes it easy to apply for and access the loans. You can also meet your expectations by working with alternative lenders near you.
Invoice factoring works in the concept that you work with a factoring company to exchange your accounts receivables for immediate funding. You can factor in your unpaid invoices and effortlessly solve your cash flow problems.
Quick Access to Funds
To effectively factor in your accounts receivables, you only need the invoices and find a reputable factoring company for the exchange. The process is fast, and you access funds quickly. Unlike asset-based lending, you avoid the long application process with low chances of approval.
Improves Cash Flow
Any business can get stuck financially. For this reason, finding an avenue to get the funds and maintain a proper cash flow becomes vital. You get quick funding and maintain a proper cash flow when you factor in your unpaid invoices.
When you consider asset-based lending, you should be ready to exercise patience. Understand that it takes time to get the loan approval. This is, however, different from invoice factoring. You increase time efficiency as you access the funds fast and focus on improving your business.
Choosing between asset-based lending and factoring requires due diligence. This also means learning more to make informed decisions. Get in touch with Jasema Capital today for professional guidance and make an informed decision.